Pension funds, the massive trove of public money earmarked to provide a secure retirement for government workers, can always be counted on to stir up controversy.

MDC chairman Bill DiBella recently paid almost $800,000 in fines to the federal Securities and Exchange Commission because of kickbacks he received from former state treasurer Paul Silvester's investment of pension monies in certain market funds.

The city of Fairfield, Connecticut lost almost $42 million because it invested with ponzi-schemer Bernie Madoff back in December 2008.

Then there's Oz Griebel, a Republican candidate for governor in Connecticut, who is preaching that public employees need to downgrade their expectations of fully-funded pension plans and accept market-driven 401k retirement plans like everyone else.

Back on March 2004, I wrote a column about pension funds called "Dump Stocks, Invest Locally." For me, the concept of putting city pension funds in a stock market which profits off the destruction of urban areas seemed counterintuitive and indeed, counterproductive.

And six years later, I think we need to revisit the concept of investing pension funds in local business opportunities.

In March 2004, Hartford City Treasurer Kathleen Palm Devine and I spoke about using pension funds as a community economic development engine in what are called economically targeted investments.

At that time, she told me pension funds are not for rebuilding Hartford. Palm detailed her own 40 year plan for securing the pension fund, and land was not among the six classes of assets she targeted for investment because land is illiquid.

Yet in 2004, Palm was getting some press because she was considering using city pension funds to finance the construction of residential brownstones on the empty parking lots between Buckingham and Capital.

That lot I consider to be one of the 15 most important lots in Hartford's rebirth as an urban mecca.

In hindsight, what I wrote in the column seems quaint, given the collapse of the housing market: "By working with Fannie Mae, it is a seemingly risk-free investment of $10 million — one percent of the total $1 billion in retirement funds that Palm manages."

Palm predicted in 2004 that with the cooperation of the state of Connecticut to build a parking garage to handle the cars that currently park there, and with the help of private developers like Phil Schonberger, perhaps in four years, a series of brownstones could be built on those empty lots.

My column suggested that the project could succeed if the brownstones eliminated cars through public subsidies to state workers to buy the homes and walk to work. Also: "The project should incorporate the construction of a small neighborhood school."

Obviously, pension funds were never invested in building brownstone houses on the parking lots between Capital and Buckingham.

I placed a call with Kathleen Palm Devine to try to find out what happened to the ETI project. I haven't heard back, and because I placed it so close to deadline, I doubt I will, but it is not hard to guess, based on the aforementioned implosion of the real estate bubble.

Perhaps, had the project been built, the city pension fund would have been decimated by one percent, and we would have lost ten million bucks.

Or it might have been a wildly successful urban redevelopment project. It would be nice if there were brownstones and a neighborhood school there now?

Hopefully, the past three years have convinced most that investing in the stock market is not the wisest path to insuring pension funds.

So six years later, I revisit that column because I have been wondering if Hartford could ever use pension funds to invest in successful local businesses, instead of investing in stocks that are bad for the economy, bad for the planet and bad for people.

For example, Yale University successfully runs its campus shuttles with biodiesel made from vegetable oil captured in part from its dining halls.

Suppose we were to look at that idea on a citywide concept, and capture all waste vegetable oil from not just school dining halls, but pass an ordinance giving the city of Hartford rights on all used vegetable oil consumed in the city to power school buses.

This would be a monopsony (a situation where one buyer controls the market). Currently, it seems that The Western Mass. Rendering Co., Inc. out of Southwick, Massachusetts controls much of the used vegetable oil market in Hartford and its environs.

It does not make economic sense for the city of Hartford to compete with Western Mass. Rendering, wherein the city would reinvent the wheel (buying infrastructure, etc) to collect the waste oil.

Nor will Western Mass. Rendering, a family owned company since 1937, want to give up its control of the local vegetable oil market.

This is where the pension funds come in. What if the City used its pension funds to create a partnership with Western Mass. Rendering?

The city could perhaps buy a share of Western Mass. Rendering to gain access to its expertise and infrastructure, and help them create a business plan that involves recycling vegetable oil for fuel.

Or, to take on this task, perhaps the city and Western Mass. Rendering could create a new corporate entity that issued stock and dividends. This could alleviate Palm's fears of illiquidity.

Or, perhaps the illiquidity worries could be alleviated over a 40-year period because the resulting savings to the school budget for not having to buy diesel fuel for buses could be returned to the pension fund.

More financial analysis would have to take place to determine the feasibility of this concept. Perhaps, when we do the accounting, we should consider the environmental bonus of less pollution coming from school buses.

Additionally, the city could factor in the fact that a small biodiesel production plant would create more jobs, and those could be city workers who pay into the pension plan, depending upon how the deal was structured.

Using our imagination, it is easy to see that this is hardly the only industry that pension funds could be invested into in order to create jobs.

For example, what if we were to use pension funds to co-invest with a scrap metal recycler to deal with the environmental nightmare that are the junkyards in the north and south ends?

Or suppose we teamed up with a wood-pellet maker for wood pellet stoves, and had crews scouring the city for wood that was being tossed on garbage day.

This wood might normally go to fuel CRRA’s trash-to-energy plant. But that I posit that the trash-to-energy plant is an inefficient and environmentally harmful way to deal with most of our trash issues.

Of the low hanging fruit we can pick for economic redevelopment, using the resources that we currently discard is one. Using empty land for food or other agricultural production is another.

We hold the keys to our economic sufficiency as a city, and need only a little creative thinking and air-tight accountability in order to make it happen.

Reprinted with permission of Ken Krayeske, author of the blog The 40 Year Plan.
To view other stories on this topic, search The 40 Year Plan at http://www.the40yearplan.com/.